Zimbabwe National Chamber of Commerce President Trust Chikohora said capacity utilization in manufacturing has hovered around 40 percent since early 2010 after recovering from around 10 percent in 2009

Companies in Bulawayo, the second-largest city in Zimbabwe, continue shutting down factories under pressure from harsh economic conditions, a lack of working credit and competition from cheap imports, particularly in the clothing sector.

Experts said this week’s closure of Labels (Pvt) Limited and the placement of Security Mills (Pvt) Limited under judicial management signal more companies will fail.

Sources said the two firms halted manufacturing on Tuesday amid reports they could not make payroll and were unable to access credit to continue operations.

Experts said companies have not been able to tap a credit line extended by the African Export-Import Bank.

Zimbabwe National Chamber of Commerce President Trust Chikohora said capacity utilization in manufacturing has hovered around 40 percent since early 2010.

“Capacity utilization increased from 10 percent in early 2009 to 40 percent in the first quarter of 2010 but has been stagnant since then due to lack of credit lines and the current harsh economic conditions,” Chikohora said.

Economic commentator Rejoice Ngwenya said struggling companies should be granted tax exemptions to help them lower costs and remain in business.

Firms that have shut factories in Bulawayo include Cotton Printers, National Blankets and National Foods, while Hunyani Printopak is considering relocating to Harare.